Sacred Heart Hospital owner posts $4M bond, is released to home confinement

Annie Sweeney, Chicago Tribune reporter

The longtime owner of a West Side hospital who has been charged with paying kickbacks to doctors as part of a scheme to recruit patients was released from custody late Friday afternoon — but only after he posted a $4 million cash bond following a contentious detention hearing.

Edward Novak, who is also CEO of Sacred Heart Hospital, was ordered confined to his home on electronic monitoring, but U.S. Magistrate Judge Daniel Martin left open the possibility that the monitors could be removed if he raises another $6 million in cash for the bond by Thursday.

The unusual conditions came after a series of hearings Friday in which federal prosecutors sought Novak's detention, calling him a flight risk.

"There are kickback cases," Assistant U.S. Attorney Joel Hammerman said before pausing for a moment, "and there are kickback cases."

The three-year investigation came to light Tuesday when federal agents arrested Novak, 58, of Park Ridge, as well as another hospital executive and four physicians in connection with an alleged kickback scheme that prosecutors said defrauded Medicare and Medicaid of at least $2 million.

A 90-page criminal complaint laid out allegations that painted a far more grisly conspiracy — patients who were over-sedated and given unnecessary tracheotomies as part of the fraudulent billing scheme.

Hammerman said patients were "purchased as commodities" and given "medically unnecessary procedures."

The prosecutor outlined for the judge how Novak once chided his staff in profanity-laced remarks for turning over documents to state regulators conducting their own investigation of the small, for-profit hospital.

Hammerman also alleged that Novak hid many key details about his personal finances from court officials.

"Obstruction is not something he shies away from," Hammerman said as Novak's jaw appeared to tense.

Robert Gevirtz, Novak's attorney, accused the U.S. attorney's office of blowing a fraud case out of proportion for media attention and of "making a federal case out of a federal case."

Gevirtz said his client has strong ties to Park Ridge, where he has lived his entire life. He said he and his wife have two children and have lived in the same house for 25 years.

Novak, wearing a jail-issued orange T-shirt and pants, has been in custody since his Tuesday arrest.

Throughout the hearing an animated Novak shook his head in disgust or pursed his lips as the prosecutor argued for detention. When it appeared the judge might set the matter over to next week to better understand his financial affairs, Novak became visibly annoyed and called his attorney over. The judge allowed a break for Gevirtz to straighten out his client's financial details for the court.

By the end of the day, prosecutors reported to the judge that Novak's net worth totaled $26 million based on a reconfigured list of his assets. Prosecutors earlier disclosed that Novak was earning $750,000 a month through his various business enterprises.